Economist A says that the economy is self-regulating. This economist most likely believes that
A) the economy can get stuck in a recessionary gap.
B) wages and prices are inflexible downward.
C) wages and prices are flexible.
D) government should enact expansionary fiscal policy when the economy is in a recessionary gap.
E) none of the above
C
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In events leading to the collapse of the housing bubble, inflated home values created a:
A. wealthier economy, which caused economic growth. B. false sense of wealth, which increased aggregate demand. C. false sense of wealth, which spurred economic growth to decrease. D. wealthier economy, which caused inflation.
For each watch Switzerland produces, it gives up the opportunity to produce 50 pounds of cheese. Germany can produce one watch at a cost of 100 pounds of cheese. Which of the following is true?
a. The opportunity cost of producing watches is greater in Switzerland. b. The opportunity cost of producing cheese is greater in Switzerland. c. The opportunity cost of producing cheese is the same in both countries. d. It is impossible to compare costs because the two countries use different technologies. e. In the two countries combined, the cost of producing one watch is 150 pounds of cheese.
The adverse supply shocks experienced during the 1970s strengthened the Philips Curve relationship between inflation and unemployment
Indicate whether the statement is true or false
Figure 10-3
In Figure 10-3, both graphs (a) and (b) indicate that the economy is experiencing a(n)
a.
recessionary gap of RE.
b.
recessionary gap of RG.
c.
inflationary gap of RG.
d.
inflationary gap of RE.